Habit Hunters

Curious about what women want in your store? Try dumping out their purses to find clues.

That’s exactly what Michelle Barry did, wreaking deliberate havoc on the precious domain of 200 millennial women. “We know a woman’s purse is pretty sacred, so what can we learn from this?” said Barry, senior vice president of The Hartman Group Inc., Bellevue, Wash.

And what did she find? Gum and candies were par for the course. But one purse held some Japanese candy, which showed that woman’s affinity for global products. Another purse held a maple bacon lollipop.

This was not some sort of random academic exercise. Rather, it was an essential probe into the shopping habits of a sought-after consumer segment: women. And the findings portray purses as a veritable grab bag of staples and oddities, perhaps reflecting a customer’s dual nature. And that’s Barry’s point.

“In fact, one of the categories that a lot of them said they shop for is if there’s some unique kind of candy or even kitschy kinds of candies,” she said. “And they don’t even know the brands.” The woman with the lollipop discovered it at a convenience store and later called that store to see if she could get a whole case to take to work, according to Barry.

“Can you actually go into that space and start thinking about miniature fragrances?” Barry challenged the forum audience. “A lot of times they’re looking for something on the run and they want something nice.” Women are just one key group convenience retailers are seeking to woo, along with the chain’s historical base. Other recruits include Hispanics, millennials, parents and the amorphous time-starved. To seek solutions to each, a team of experts presented at the CSP 2010 Consumer Insights Forum, offering fresh solutions for targeting each group:

Millennial Magic. Accounting for potentially 82 million people, millennials (born between 1982 and 2002) warrant focused c-store attention. Barry describes the group as being overrun with choice, having truly global tastes and desiring new things. As for branding, millennials purchase iconic brands, but they also like to experiment with new snacks and beverages—particularly with unusual flavor profiles.

“What an awesome opportunity for you to take some of the classic iconic legacy brands that they expect to see in the stores, but partner with your suppliers and start thinking about highlighting some of their new brands there,” Barry said. “And put them side by side so you’re not asking them to search out these new things. This is that kind of attractand- sell mentality.”

Barry also spoke about some unusual products that have turned up at c-stores, such as cardamom and sweet-corn popsicles and Mystery Flavor Doritos. “You have permission to be a little weird. Go ahead and be a little funky, and have a sense of humor, for goodness’ sake,” she said. “Other retailers are very predictable and safe and corporate. They’re not looking for you for that.”

Hits for Hispanics. Today’s population of 50 million Hispanics in the United States is expected to soar to 132.8 million by 2050, accounting for 30% of the population.

And this ethnic group enjoys its convenience stores. According to a study from Burbank, Calif.-based Garcia Research Associates Inc., on average, they spend nearly double what the general market spends at a convenience store: $19 vs. $10. Their maximum spend was $150 vs. the general market maximum of $50.

“Some of this may be related to the fact that they’re kind of pooling to buy products or shopping in larger groups,” said Mario X. Carrasco, Garcia’s vice president of online research. “But that’s something to keep in mind as far as their c-store experience.”

Because price is also more important to Hispanics—with 11.7% saying they choose a store based on price vs. 6.8% of the general market—he suggested prominently displaying larger package sizes, encouraging “buy one, get one” promotions from manufacturers and bundling products at a special price for multiple consumers.

Parents and Kids. According to Thom Blischok, president of global strategy and innovation for Chicago-based SymphonyIRI Group, kids view shopping at convenience stores as a treat, with 54% of parents saying their kids view it as a good place to buy treats. About 41% said c-stores are a good place to buy their children’s favorite treats, and 51% let their children pick out what they want at c-stores. Baby formula/electrolytes is an untapped product for c-stores, according to Blischok. But it can account for $25.6 in quarterly spend per buyer— substantially more than the $17 quarterly spend on the beer/ale/alcohol cider commonly found in c-stores.

Time-Starved Consumers. A recurring theme throughout the forum was that consumers are time-starved. A study from SymphonyIRI reported that 39% of consumers said they are usually in a rush and actually have no time to go into a convenience store. To combat this notion, Blischok suggested, “We make people recognize that we have the fastest c-store in the East or the West. In and out in 30 seconds or less, or you get it for free. You’ll get people to stop inside your stores, I guarantee you.”

Herb Sorensen, global scientific adviser for New York-based TNS Global Retail & Shopper Practice, also spoke about the need for immediacy and its benefits to c-stores. He shared research that the less time spent in a store means the most dollars spent per minute, with shoppers who spend 5 minutes shopping spending about $7 per minute, and those spending 60 minutes spending about $1 per minute. “If you can cut down the amount of time they’re in there and raise the selling speed, you will actually sell them more in a shorter period of time,” he said.

Quick-trip shoppers who frequent c-stores are the least sensitive to price, in the interest of time, he said: “They don’t care what it costs—they want the item. … If you think your business is being driven by price, you’re making a big mistake. Time is more important than price.” So how do you make sure your customers save time? Simply put: Know your customer and his or her habits.

WHAT THEY’RE BUYING

Foodservice, candy and snacks continue to drive customers into c-stores, and presenters shared some insights around those categories.

Foodservice. “We believe that food and beverages offer a significant opportunity for you all to build traffic around higher net, higher profit-margin items,” said Bonnie Riggs, restaurant industry analyst for The NPD Group, Port Washington, N.Y. “So what many are looking to do is evolve from being a place just revolved around gasoline to a place where people refresh and refuel.”

There are 59 billion visits annually to foodservice operations, with c-stores accounting for 4.4 billion, or 7%. While c-stores experienced no change in percentage in 2010 vs. 2009, other formats (QSR except retail, QSR retail and fullservice restaurants) experienced drops of 2% to 3%. “You might be benefiting from some trade-down,” Riggs said. “And of course, you have many points of distribution.”

The price/value equation will remain key to keeping customers, according to Riggs: “They’re willing to pay, but they expect you to deliver on their expectations, in terms of the price that they’re paying.” That said, promotions are paramount, accounting for 14% of c-store foodservice visits this year, up 8% from 2009. “Reasonable, affordable and good-tasting food: Those are the key attributes for c-store operators,” she said. “That’s how your consumers define what value means to them when they visit your concept.” _

Candy. Joe Gottschalk, vice president of consumer and market insights for Hackettstown, N.J.-based Mars Chocolate North America, shared some trends in candy: twists on older candies (as seen in M&M’s chocolate pretzels), aerated products, a focus on natural and wholesome ingredients such as honey, gourmet confections (such as caramels with sea salt), antioxidant fruits in both chocolate and nonchocolate candies, and dark chocolate.

When it comes to chocolate products, “As people load their pantries with them, they consume them more quickly, so the purchase cycle doesn’t extend like you would expect it to,” Gottschalk said. “What it means is we don’t think there’s really any limit to the upside of the expandability of this category.” There is also opportunity in impulse sales. According to Mars research, 6% of chocolate buyers plan their candy purchases, 35% make them on impulse and 59% do a combination of both. “A lot of those decisions are happening instore,” he said.

Snacks. Snack traffic has been on the rise over the past decade, and it currently accounts for nearly 10 billion visits to the industry, according to Riggs of NPD.

In an interesting story of food-beverage alliances, Eric Johnson, senior director of marketing at Northfield, Ill.- based Kraft Foods Inc., explained that day-part and beverage are what drive consumers’ snack selections. Morning snacks tend to be sweet and soft, and are companions to coffee or milk. Midday snacks are salty, sweet, crunchy or chewy snacks, and are chosen to complement whatever beverage the snacker is having— but the beverage is chosen first.

HOW TO REACH THEM

In addition to knowing who your consumers are and what they are buying, it’s essential to know how to inspire their purchases. Gottschalk suggests the acronym CARE as a way to help retailers boost sales: C = Carry power brands; prevent walk away;

A = Accommodate, offering kings and singles;

R = Right location to capture that impulse sale by capturing the attention of the shopper;

Sell What They Buy. Selling what consumers buy might sound like common sense, but as Sorensen explains, 30 out of 2,000 items contribute 25% of total store sales. “If you see that you have the No. 1 item in the store that’s selling, you can increase sales of that a lot easier than anything else,” he said. “That represents deep-seated needs and desires on the part of your shoppers, and you’re not tapping it fully.” He suggests highlighting top sellers with verbiage at the shelf to help consumers decide what to buy, such as “Shopper’s #1 Choice.” After putting up a “top seller” sign, one store saw a 324% lift in store-brand butter, for example.

Make the Most of Merchandising. Johnson of Kraft said that if you show shoppers a Coke Zero with a hot dog in signage, they will think they have to buy a Coke Zero. “We all know it’s the family of Coke products, but we do need to be clearer with these things, because they do take [them] literally,” he said. Also, he said, make sure offers are intuitive and play off natural adjacencies, such as anchoring baked goods to coffee for morning occasions, chips to beverages, roller grills and lunch foods for lunch occasions, and salty/sweet snacks with carbonated soft drinks for the evening snack occasions. _

Try New Things. Gottschalk suggests invigorating the candy category by incorporating new products. It’s important to have select new products at the checkout and other key locations. Such efforts can lead to a great trial lift the first four to six months, but, he cautioned, shouldn’t be continued if the products aren’t moving.

Go Digital. Krista Lorio, consumer insights manager for Minneapolis-based General Mills Inc., shared the results of a study conducted via Forrester research, in which c-store shoppers were designated as heavy users if they went to cstores daily, moderate users at once a week or more and light users at less than once per week.

The study found that heavy users spend more time online per week, 20 hours vs. 18.5 for light and 18.9 for moderate. They also use the Internet more than they watch TV. Heavy users are also more likely to post or send information about brands and products to friends to influence their opinion and advocate for their favorite brands and products online.

Popular interactions for all c-store users included enter- ing a company’s sweepstakes, reading an e-mail ad or promotional newsletter and registering for a promotion on a company website. (For information on how specific retailer attendees use the Internet to entice customers, see sidebar, left.)

Heavy-user interactions included “friending” a company on a social-networking site, participating in a company- sponsored online forum or blog and following a company on Twitter.

Nearly one-third of heavy/moderate users have visited a store in response to an online ad. “Make sure your website or Facebook is all-inclusive,” Lorio said. “Make sure they understand they can sign up for text and e-mail promotions, because you may not be able to get them there again.”

Top Tips

Women, millennials, Hispanics and parents are key groups to focus on for c-stores.

Convenience will continue to be important for time-starved consumers, and retailers should tap into that.

Consumers are more concerned about value than price.

Much potential exists in foodservice, with c-stores accounting for only 7% of foodservice visits

Inside the Minds of Consumers

Imagine a world in which consumers share how they shop at convenience stores. Next, imagine being able to peek into their minds at the exact moment they’re thinking about it.

Thom Blischok, president of global strategy and innovation for Chicago-based SymphonyIRI Group, took retailers and suppliers into that world during the company’s first live survey, presented at the forum.

“The more we focus on shopper behaviors, the more we understand that, especially in the convenience store, the decisions are made immediately,” Blischok said. He wanted to tap that thinking to provide real-time market research. Attendees had prioritized the survey’s questions. Blischok provided analysis during the forum, and results included: _ For the c-store “sweet spot” of types of stores consumers visit while traveling or commuting, 19.67% said they use the channel. Grocery stores weren’t far behind at 18.09%, and drug stores had 14.25%. Blischok suggested an “energy for the road” program. “Tell them that they’re on a road trip and you recognize that,” he said. “And you have some products that will help them keep awake and alert on the road.”

Another natural for c-stores are products consumers want for work or to use throughout the day. For such shopping occasions, c-stores tied with drug stores at 14.36%, behind grocery (20%). “I had no idea what the response would be up until I just saw the response on here,” Blischok said. “But it validates the point that other channels—I’m not going to say they’re violating your space, but they sure as hell are giving you a challenge to compete going forward.”

When asked for which occasions consumers shop c-stores, 28.11% said it was when they are getting gas. The next closest was on the way home from work or school at 14.38%. “I would begin to advertise after school, after work,” he said. “Begin to position yourself differently in the market space to tell people the reason that you’re there.”

Consumer Communication Evolution

The rate of adoption is revolutionizing how we adapt to the digital landscape, according to Krista Lorio, consumer insights manager for Minneapolis-based General Mills Inc. As an example, she said that radio took 38 years to reach 50 million users, TV took 12, the Internet took four and Facebook took two. The next generation of that is iPhone apps, which took only 30 days to reach 50 million users. Facebook, in particular, is increasing in popularity among all age groups and has 450 million users worldwide, with 50% returning daily. Some efforts shared from some of the retailers in attendance:

Atlanta-based RaceTrac is active in FourSquare, providing “mayors” (FourSquare’s name for folks who check in at the stores the most) with enhanced deals.

Phoenix-based Danny’s Family Cos. is also active in Facebook, Twitter, FourSquare and Yelp, and the company is on a waiting list to get on Groupon.

Wawa, Pa.-based Wawa recently hit half a million fans on Facebook.

Rod Martin, vice president of marketing for Corpus Christi, Texas-based Stripes, said Facebook is an important part of establishing relationships with customers. “At the end of the day, hopefully we listen better, and we respond more earnestly with a consistent voice,” Martin said.

E-mail is still the most valued strategy, however, with 62% of shoppers subscribing to permission-based e-mails, according to Lorio. And many shopper/subscribers are taking action. As a result of an e-mail, 91% downloaded or printed a coupon, 81% clicked on a link to learn more and 76% tried a product for the first time. Nearly one in five retailers is communicating offers and coupons to shoppers via e-mail. Use e-mail to help them come back to your page once a quarter, Lorio advised: “People are busy and they don’t always have the time to go to a site; this is how to get them back there.